How Barack Obama's medical-marijuana plans went up in smoke

The message can take many forms. Sometimes it's armed federal agents with a warrant and handcuffs. Sometimes it's IRS auditors. Sometimes it's just a simple but powerful letter from a U.S. Attorney. But the effect is always the same. It's all part of a tough new federal crackdown on the burgeoning medical-marijuana industry in California and the 15 other states that have legalized pot for the sick.

In recent months, federal officials have shuttered dozens of storefront dispensaries nationwide. Whole cannabis crops in California's Central Valley have been tilled under, and the feds have warned local and state officials not to implement laws or regulations that allow the medical use of a drug still outlawed, without exceptions, under federal law. "None are immune from action by the federal government," warns Northern California's U.S. Attorney Melinda Haag.

It's all happening under the Administration of Barack Obama, who pledged as a candidate in 2008 to ease federal pressure on medical marijuana in states that had legalized the practice. "What I'm not going to be doing is using Justice Department resources to try to circumvent state laws on this issue," he said back then. Obama even promised to end Drug Enforcement Administration raids on medical-marijuana suppliers. "The double messaging is what has driven people crazy," says promarijuana California assemblyman Tom Ammiano.

Obama defends himself by arguing that the medical-marijuana industry has changed in ways that Washington just can't ignore. Federal prosecutors, he points out, still will not target genuinely sick patients or their immediate caregivers. "The only tension that's come up--and this gets hyped up a lot," Obama said in a recent interview with Rolling Stone, "is a murky area where you have large-scale commercial operations that may supply medical-marijuana users but in some cases may also be supplying recreational users." Prosecutors cite the explosive growth and enormous size of the new medical-marijuana industry, the tens of millions of dollars in cash changing hands, a poor track record of local regulation and anecdotal evidence that recreational interstate trade in the drug is booming. "There are people suffering from serious illnesses who believe they benefit from the use of marijuana," says Haag. "If that's all we were dealing with, I do not believe there would be any federal involvement."

But on the ground, even medicinal-pot peddlers who follow state law to the letter are being shut down or squeezed. In California and Colorado, prosecutors have busted dispensaries with local permits for operating within 1,000 ft. of a school or playground. The IRS has told vendors they can't count their expenses as legitimate business deductions. Gun shops have been advised not to sell to consumers of medical marijuana. And the Department of Housing and Urban Development has barred state and local public-housing officials from renting to otherwise law-abiding medical-marijuana patients.